Seattle commuters are ready to save money on commuting and help the environment.
The Seattle City Council passed a Commuter Benefits ordinance in October that Councilmember Mike O’Brien said was “...win-win-win” for commuters, employers and the environment, according to the Seattle Times.
Seattle is encouraging its commuters to use mass transit or rideshares over single-car commutes. This will help the city reduce carbon emissions and relieve traffic congestion.
The Seattle ordinance will go into effect on Jan. 1, 2020. Though that may seem like a long way off, there’s a lot of planning that needs to be done to ensure you are in compliance.
If you work in Human Resources and is responsible for managing the benefits of your company, this article is for you.
Here is how commuter benefits will work in Seattle.
What is a commuter benefit?
Commuter benefit is a tax-free fringe benefit that allows employees to pay for transit, parking, and vanpool costs using pre-tax money, including:
* Transportation to or from work via subway, train, bus, or ferry
* Parking at or near the office at meters, garages, or lots
* Parking at a commuter lot where commuters transfer to mass transit
* Vanpool fees
The employees save the money tax-free in their paychecks and use it to pay for mass transit.
What’s the savings for employees?
The federal limit allows employees to save up to $265 per month. The amount of savings will vary by employee (earnings, marital status, etc.). But the Seattle City Council said a minimum wage employee would save about $236 per year if they purchase $100 monthly bus passes.
In the state of Washington, a married person who makes $75,000 per year and spends $265 on commuting costs could save up to $720 per year with commuter benefits.
What’s the savings for employers?
Employers save up to 7.65 percent on payroll taxes because employees are setting aside money in their paychecks tax-free.
Who is impacted by the ordinance?
The ordinance states that businesses with 20 more employees will be required to offer commuter benefits. Employees who work an average of at least 10 hours or more per week must be offered commuter benefits. Tax-exempt organizations and government agencies are excluded from the ordinance.
What types of transportation are eligible?
How can employees use the benefits?
Employees will use prepaid debit cards, smart cards, transit passes, direct pay, among other options.
How will a business administer the benefits?
Businesses can handle the administration themselves, or contract with a third-party administrator like Commuter Benefits Solutions.
Enforcement begins on Jan. 1, 2021. The ordinance follows federal laws on reimbursing employees for transportation under fringe benefits. A third-party administrator can ensure IRS compliance and make life easier for a business owner.
An experienced commuter benefit provider will guide you through every step of the process of implementing a successful commuter benefit program to comply with Seattle's mandate.
Why should you choose Commuter Benefit Solutions to help you comply?
Here are just a few things that set us apart:
- Easy Online Administration
- Programs for Companies of All Sizes
- In-house Customer Service
- Direct Employee Delivery
We live and breathe commuter benefits!
How to Start a commuter benefits program in Seattle?
Learn how to comply with the Seattle Commuter Benefit Ordinance and start a commuter benefit program. Download our toolkit.